Er, I don't think Google has said what the rationale is. For all you know it's the same as why most people choose to buy rather than rent - a plan to stick around for the long term and that way it's not "dead money".

Unfortunately, CAP (chip authentication program, the technical name for chip/pin) isn't easily re-used. Even though it's described by enormously complicated specs, many banks have slight variations on both card and reader hardware. Also, the relevant keys you need are held by the banks and there's no existing way to get them to attest to arbitrary things for third parties. Not that making banks even more critical is a great idea either ....

Allowing advertisers to directly contact users would go against Facebooks entire business model, which is to be the middleman that matches advertisers to users and takes money off the top. Of all the things that worry me about Facebook, them selling my info directly to advertisers is not one of them.

However, the expansion curve was designed by somebody with utterly no understanding of economics, and the built-in deflation inherent that would come with expansion in BitCoin use guarantees they'll never become widespread for mainstream transactions because of widespread volatility in the exchange rate vs. stuff you actually want to buy.

This argument is both very common and wrong. So I'd like to address it here.

Firstly, let's put aside the appeal to authority. Conventional economic theory/monetary policy has led to an absolute clusterfuck - a worldwide recession that shows no signs of ending any time soon. If the current understanding of economics leads to this, then it's time to question that understanding from bottom to top.

Secondly, let's also set to one side the arguments that are contradicted by reality. Empirical evidence shows that deflation does not lead to depression. If the Minneapolis Feds study doesn't convince you, look at Bitcoin itself. Despite a dramatic increase in the value of the currency, the Bitcoin economy has grown equally dramatically. BitPay went from 1000 to 2000 merchants in the space of only a few months, and that's only a small subset of Bitcoin-accepting entities. So the system is, again, an existence proof that this common belief is mistaken. Likewise, Bitcoin has been remarkably non-volatile this year. It spent almost all of 2012 at one of two price points: $5 per coin in the first part of the year and somewhere between $10 and $13 per coin in the latter part. Hardly different to the volatility you'd expect from any other currency.

Thirdly, let's address the idea that credit is the lifeblood of the economy. Any economist will tell you that growth comes from innovation. Improvements in productivity, in technology, reductions in the cost of doing business. Wealth - the things we have around us, the quality of our food, our healthcare, the stability of our society ..... none of this comes from credit. It comes largely from technological innovation and good governance. If anything, history shows us that massive amounts of cheap credit has a destabilizing effect on the economy, that's why classical economics says that very low interest rates cause "overheating" and an increasing number of commentators place our current woes on many years of ultra-cheap credit. All that money had to go somewhere, and after the stock market bubble of the late 90s popped, it ended up flowing into real estate speculation. Now that bubble burst too, the only question is where all the cheap money is going now ...

I don't get it. What do you have against Bitcoin? Has it killed your dog or something?

Your post is a stream of non-sequiturs. Yes, the primary exchange was hacked ... once ... and it resulted in a minor loss that the exchange covered from their own profits. Users did not lose any money. Yes, very tiny ad-hoc "one man and his dream" exchanges have also been hacked, but hardly anyone used them, so again, impact was very minimal. Do you think US banks never get hacked or robbed? Think again.

Many US banks have unbelievably woeful security that results in accounts being routinely emptied. Consumer accounts are insured by the government but business and organizational accounts aren't, yet many of them are protected by nothing more than a password or secret question/answer. That's absurd. Now nothing stops you under-protecting your Bitcoins, but at least you can upgrade to more security if you want. You're not at the mercy of your local bank.

What on earth makes you think that starting a "virtual business is more trivial than a physical business"? Did you step out of a timewarp from the 70s? Do you think competing with Amazon is inherently easier than competing with your local supermarket? Exchanges, as you note, rely heavily on their users trust in their security (as do all financial institutions). That's what stops them "simply reforming under a new identity". They'd be starting from zero and have no advantage over anyone else. And FYI financial regulations do apply to Bitcoin exchanges as they would any other online currency exchange. That's one reason the big ones all demand government issued ID in the same way a bank would.

Feel free to laugh at people who are using a next-generation financial system. It's been many years and Bitcoin is still around and doing fine, so I doubt anyone will care.

That isn't what backing means. Every single reply to my post has the same issue. Backing does not mean "the issuing authority has assets they can sell" and it doesn't mean "the issuing authority can force me to use their tokens through the barrel of a gun".

To say a currency is backed by something has a very specific meaning, which is that there is an asset literally "behind" the currency. The currency itself is merely a proxy for the backing material, one can be exchanged for the other at a specific rate. The gold standard meant you could, at least in theory, go to a bank or the government, hand in some currency and walk out with gold bars.

So given this clear definition it's meaningless to say a currency is backed by "the authority to tax". That authority might incentivize a large population to obtain these tokens and thus give them some value - but that isn't backing. It's taxation. It's also wrong to say a currency is backed by the ability to sell something like land - OK, so the government sells some land it owns. What does it sell that land for? Oh, right, it sells the land for dollars. So if I lose confidence in the dollar and want to hand them in, in return for the asset that backs them, the government selling land and giving me back more dollars doesn't help. I'd need the actual land itself and there'd need to be an actual somewhat fixed exchange rate between dollars and land. But there isn't.

If you want to argue that dollars have value because the US government taxes its citizens in that way, go right ahead. That argument doesn't lead to "Bitcoins are worthless because no government taxes in them" though. Bitcoins obviously aren't worthless because they started out having no value when they were first created, and obtained value over time as people learned about them. The system is an existence proof that you'd be wrong.

Proving Bitcoins have value is trivial - there are exchanges where they are traded against other currencies for non-trivial prices, so they clearly have value. What more proof could you demand?

Yes, you can charge back with credit cards. This is great for the credit card companies who then lose the incentive to make their systems more secure, because merchants (ie, the poker companies) lose the money. With Bitcoin you cannot, so the deck is metaphorically stacked in favor of the merchant vs the punter. It's a little better than the reverse because most merchants at least have reputations they want to protect and aren't going anywhere, unlike buyers who can disappear in an instant. But Bitcoin does have ways to offer buyer protection - it's discussed in the very first page of the white paper describing the systems design. The protocol allows for dispute mediators who can decide who gets the money (buyer or seller) but who cannot steal the money themselves.

The US hasn't been able to back its currency with gold since Nixon formally abandoned the gold standard (and in reality, much before that). Land? What currency has ever been backed with land? Can I go to the US government with a stack of $100 bills and say "ok, I'd like the land that backs this currency now please?". Er, no. The US, like most countries, doesn't back its currency with anything. The only thing that people can exchange dollars for with the government is .... more dollars.

No control? That's an interesting way to look at it. Bitcoin is controlled by the consensus system that underlies it, if you decide you want to violate the rules then you are split off automatically into a parallel universe where whatever you do won't be recognized by your trading partners. That is a much stronger form of control than traditional currencies have. To change the rules requires the economic majority to upgrade (and thus force everyone else to upgrade with them, so trade can continue). It's pretty democratic, in that sense.

Contrast this to, eg, the US dollar, where control has been deliberately passed to a quasi-private branch of government known as the central bank. Its unelected leader pulls the levers of monetary policy in an attempt to plan the economy.

So both types of currency are controlled, just in different ways.

If you RTFA you'll see that the researchers themselves used Google Translate to convert most of the "bad stuff" into English, because the source text was in Russian. That, right there, makes me question the validity of this research. Also given that they were reading underground forums it's not clear to me how they verified they'd cross-correlated posts correctly. Something to read up on later, I think.

Don't fall too far down the Austrian School hole, though. The past 6 years have proven that modern Keynesian economic models are a very good description of how the global economy actually responded to the recent massive financial problems.

No it hasn't. It's been the exact opposite. Recent years have pretty much discredited the whole idea of Keynesian monetary policy, namely government spending during recessions and government hoarding of surpluses during booms. Good in theory, completely worthless in practice because, shock, governments don't ever do it.

Let's review a few facts. The first fact is that according to Keynesian teaching, current US monetary policy should result in massive stimulation of the economy - borrowing is as cheap as the Fed can make it. According to the theory, right now the economy should be borderline overheating the juice has been turned up so high. Actually it is sputtering along apparently indifferent to the Fed.

The second fact is that there's a good explanation for this which hasn't previously been accounted for in the mainstream teaching. Namely, that Fed policy hasn't juiced the economy because people don't want to borrow, no matter how cheap it is. That isn't something they anticipated, so QE1 was largely DOA. It enriched the banks who now got a great wheeze in the form of being paid interest on reserves given to them for free, but otherwise was just pushing on string. QE3/4 have thus resorted to outright monetization of the debt, the avoidance of which was one of the primary arguments for central bank independence. Oh well.

Now you point to BLS data as if to say, look ma, no inflation! But I feel that your post is misleading for three reasons. The first is that bill_mcgonigle didn't say "inflation should be higher than it is given current policy", so you are arguing a strawman. The second reason it's misleading is you're quoting a compound rate and neglecting to mention that. 2% inflation in 2010 is a much larger increase in prices than a 2% inflation in 1985. Every year, if prices rose by the same fixed amount, the quoted inflation rate would go down because it'd be a fixed increase over an ever larger base price. That isn't happening. The third reason is that it's only very recently the USG adopted policies that would be expected to increase inflation. QE1 had little effect, QE2 was "operation twist" which wasn't creating new money, actual creation of money that will enter the economy is a relatively recent thing.

There's a third problem I have with your post about the Austrian School. You bring it up right after talking about inflation. The Austrian School teaches common sense on inflation - if you print money, inflation is the result. This isn't some radical crazy philosophy. It's both obvious and supported by many examples throughout history (Edicts of Diocletian and Germany in the first part of the 20th century spring to mind). The crazy, radical philosophy is that endless money printing (that works, so not QE1) will NOT affect inflation. Even the Fed don't believe that which is why their current policy of open ended bond buying is supposed to end if/when inflation goes over a certain level. They know that's the expected end result and they also know inflation is bad.

The US won't reach full blown civil war in our lifetimes, I think this is clear. That does not mean the US government won't become an oppressive, authoritarian regime that crushes dissent and fucks over the people.

When it does come, oppression will be strongly targeted against the few people who are trying to organize resistance. That "resistance" will not be based on guns because a small group of politically motivated people trying to use guns to make their point are simply labelled terrorists and killed as soon as possible, via the overwhelming technological might of the state. Owning an assault rifle is pointless if your opponents have drones. So you'd have to start by trying to undermine the government in some other way.

At that point you're going to run straight into the other tools of oppression governments have. For instance, perhaps you will be labelled as a terrorist and excluded from the economy. Think it's not possible, that your friends and family wouldn't go along with it? Think again! The US Treasury thought that guy, a US citizen resident in the USA, was a terrorist (working with Hamas) - but couldn't actually prove it. And when he finally got a chance to defend himself in court, he was acquitted. It made no difference. The Treasury added him to the list of "specially designated nationals" and that made anyone who traded with him a sanctions violator, punishable with prison. Did his countrymen refuse to turn on their fellow citizen at the behest of an out of control government, as you suggest they would? Fuck no. Far from it.

If mass oppression of dissent against the US government ever happens inside the USA (as opposed to outside where it is oppressed all the time), it won't look like the National Guard taking on an army clean shaven all American heroes. That's a fantasy. It will look like it did in the DDR - a massive secret police, a surveillance state, people who try to organize resistance to the state finding themselves blacklisted, reported on, spied on and undermined via whatever means possible. And it will be their neighbours doing it.

The US is in trouble because of mindsets like yours - the belief, brainwashed into children from birth, that America is somehow a shining beacon of freedom, unique amongst the world. And in particular the belief that the Constitution is somehow better or more powerful than other countries equivalents. Reality check: many countries have constitutions. And most of the ideas that form of the basis of US government were formed by, gosh, foreigners!

It is especially a problem for you because as far as I know, there is no punishment in the United States Code for passing laws or regulations that are unconstitutional. Or if there are, they're apparently ineffective. The result is that the US Government, quite independent of any other nations, routinely wipes its ass with the entire document and passes laws that they know full well flatly contradict the constitution (in spirit, wording or both). Here are a couple of blatant examples from recent history.

(1) The Magnitsky bill. This is a bill of attainder - it enumerates the people it intends to punish. Bills of attainder are explicitly forbidden by the constitution because they were abused throughout history. The constitution says "No Bill of Attainder or ex post facto Law shall be passed". Doesn't get any clearer than that.

(2) ITAR. This was a law that censored free speech by cryptographers, in a ham-fisted attempt to stop knowledge of cryptography from spreading (apparently the USG believed non-Americans were too stupid to develop the maths themselves). It was struck down by the courts and then re-passed as EAR, which was struck down again. The constitution says "Congress shall make no law ... abridging the freedom of speech". Doesn't get any clearer than that. Yet what was the punishment for the Congressmen and bureaucrats who, on learning that their law was unconstitutional, immediately re-passed it? Nothing!

And that's ignoring all the other obvious problems like the abandonment of the warrant system (4th amendment).

You blow all this off as if it can be blamed entirely on "them". Get over it. The "us" versus "them" mentality that typifies US thinking will eventually cause your country to slide ever further into authoritarianism.

Wait, so you admit you don't understand what happened in Greece (which was quite simple), but you're sure it's not the same thing as in the USA? How does that work?

What happened in Greece was that investors stopped believing that the Greek government could pay back its debt. Yields climbed to levels so high that it was practically impossible for them to borrow any more and because they had a massive structural deficit the economy was plunged into deep recession.

If you want a slightly bigger picture, when Greece entered the Eurozone they produced deeply fraudulent statistics about the state of their economy that made it look like a real, honest to goodness first world country. As a result they could borrow very cheaply. Later on it was discovered that the economy was in much worse shape than they had admitted to and that Greece was, to a large extent, actually a third world country posing as something more. As one memorable quote put it, they imported flat screen TVs and exported tomatoes.

I've seen some people posting that if only Greece had its own currency and was not in the Eurozone, the crisis could have been avoided and everything would have been peachy. This is a fundamental error. There is no way to avoid recession in Greece because it is simply the name we give to "the economy fixing itself". The Greek economy was massively distorted by unsustainable government spending, of which examples are legion. Entire government departments that were discovered to exist only on paper. Railway workers that earn more than skilled engineers in other countries do. Etc. The Greek standard of living was artificially pumped on cheap debt for a long time and is now returning to its normal state. A very painful process, of course. If Greece had its own currency the same thing would be happening via a different mechanism - they would print the money needed to pay back their debts, inflation would soar and Greece would have been ejected from the markets for a while, causing (if anything) even faster and deeper depression than what they already have. The Greek people know this which is why they vote to stay in the Eurozone.

The USA is in a somewhat different position because it's much larger than Greece, and the dollar is the currency you need in order to buy oil, which provides an artificial lift. Countries that try to switch to a different currency tend to get invaded. A bunch of other issues too keep the dollar artificially valuable. I seriously doubt there's going to be a Greek-style correction in the USA, but who knows. Maybe we should ask Peter Schiff :)

I think there are several things in the article that are pretty much impossible to defend. Maybe you did not read it, or you have a very different worldview to me.

• Classifying OWS as "domestic terrorists" and having agents in those parts of the FBI investigate them. This flatly contradicts common sense. People protesting against banks are not terrorists, unless you warp the meaning of "terrorist" to encompass any politically motivated crime. It's obviously very convenient if you can classify people you don't like as terrorists, but that doesn't mean they should be allowed to do it.
• The fact that the government apparently lied in response to FOIA requests by claiming no such documents existed, when those documents later turned up. Lying in response to requests for citizens from transparency is a major warning sign of bad things to come.
• The general line-blurring that apparently occurred between state and private security. Law enforcement is the domain of government for a reason!
• The general point made about financing of WikiLeaks is sound. Going via the judicial system, passing laws which are not bills of attainder, building a case, prosecuting it, allowing for a defence etc .... all very messy and inconvenient compared to simply adding the people you don't like to a banking blacklist. Exclusion from the financial system should not be allowed, period - if somebody has broken the law, then it's the judicial systems job to handle that, not the banks.